As protests continue to rock Libya, with demonstrators setting fire to the House of Representatives in the eastern city of Tobruk and Libyans in the capital Tripoli demanding action against armed militias, soaring inflation, and power outages— global oil markets are on edge over the specter of another civil war.
Since mid-April this year, key oilfields and ports have been closed due to protests stemming from a political crisis that has rival factions scrambling to secure control over oil facilities and oil revenues.
Prior to this, Libya was producing around 1.2 million crude oil barrels a day. Today, the country is producing about 85% less, though exact figures are difficult to come by, with the Oil Ministry and the National Oil Company (NOC) not cooperating with data.
Libya’s Tripoli-based Central Bank says the country has officially lost $ 3.5 billion in the first half of this year due to oilfield closures as deadly protests erupt to challenge the political stalemate.
The first six months of 2022 saw Libya collect 37.3 billion dinars from oil sales. That amount reflects a 100 million dinars less in oil sales compared to the first five months of last year.
Negotiations between rival factions, east and west, have been ongoing in both Cairo and Geneva, with no agreement in sight over a framework that would make it possible to hold free and fair elections.
“There are many reasons why protesters have decided to take to the streets in anger. But they can be summarized simply by the failure of the politicians to reach a political agreement and their preference instead of wrestling with each other over power at the expense of ordinary citizens, ”Libyan academic and writer Ahmed Mayouf told Al Jazeera. Related: Why Putting A Price Cap On Russian Oil Won’t Work
A key issue is control of oil production and revenues.
The stalemate has most recently prompted the United Nations and US officials to suggest that Libya’s oil revenues be managed by third-party caretakers to ensure equitable distribution and end the impasse.
UN Advisory on Libya, Stephanie Williams, last week called for a temporary mechanism to manage oil revenues, saying that with this, the power rivalry could last indefinitely. Such a move would essentially mean appointing a foreign trustee to oversee Libya’s oil wealth.
US Ambassador to Libya Richard Norland has likewise suggested a trusteeship for Libya’s oil revenues.
By Julianne Geiger for Oilprice.com
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